Third Circuit: Blakeley & Blakeley Wins Crucial Third Circuit Appeal for Vendors Asserting the “New Value” Defense to Preference Actions

By |January 18th, 2014|Articles, Breaking News|0 Comments

In a precedential decision impacting critical vendors and, arguably, section 503(b)(9) claimants, the United States Court of Appeals for the Third Circuit upholds the Delaware district court’s affirmation of the bankruptcy court’s initial ruling in In re Friedman’s Inc., 2011 Bankr. LEXIS 4500 (Bankr. D. Del. 2011).  The opinion, filed December 24, 2013, states that “We hold that where ‘an otherwise unavoidable transfer’ is made after the filing of a bankruptcy petition, it does not affect the new value defense.”  In other words, even if a vendor receives payment of its pre-petition invoices after the petition date, the vendor is not precluded from later using those same invoices as part of a “subsequent new value” defense to a preference action.  The filing of the bankruptcy petition “fixes” the preference analysis. […]